The average electricity price of the Nord Pool system in April increased by 11% compared to March and was 37.86 EUR / MW. The trend of electricity prices in the Baltic States was different from the price of the Nord Pool system. In the trade areas of Latvia and Estonia, prices remained at the level of March – 43.60 EUR / MWh. At the same time, the average monthly electricity price in Lithuania decreased by 7% and was 44.74 EUR / MWh. At the beginning of April, negative nightly electricity prices were observed in the entire Nord Pool region, except for the Norwegian sales areas. This decrease was due to a number of factors, such as high wind farm generation, lower demand on public holidays, and low electricity prices in Germany. In the Baltics, the hourly price range ranged from -1.41 EUR / MWh to 125.00 EUR / MW.
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The air temperature fluctuated in April – it was cool at the beginning and end of the month, but the weather was warmer and sunnier in the middle of the month. Overall, demand in the Nord Pool region decreased by 12% compared to March, but was 5% higher than in April of the previous year. Although the weather was variable this month, the filling of water reservoirs in the Nordic countries was 9% above the long-term norm. In contrast, hydropower was 5% lower than in March. The development of new cross-sections from Norway to Germany (Nordlink) and the United Kingdom (North Sea Link) has provided an incentive for hydropower producers to save water in reservoirs now, in anticipation of higher electricity prices in the autumn. Electricity prices in April were also affected by a 14% decrease in wind farm development compared to the previous month. In April, the dynamics of electricity prices in the Baltics were influenced by the price level in neighboring countries. Energy flows from Russia were 34% lower, as well as 11% lower energy flows from Sweden’s SE4 area affected the price of electricity in the Lithuanian trade area, which was the highest in the Baltics in April.
Electricity futures prices are rising
The main factor influencing the prices of electricity futures contracts this month was the downward trend in hydropower ratios in the Nordic countries from 7.4 TWh at the beginning of the month to 0.5 TWh at the end of the month. The hydrological balance was not the only factor determining the fluctuations in the system’s future contract prices, it was also influenced by the rising prices of energy products and allowances.
Compared to the previous month, the average price of the electricity system’s May futures contract (“Nordic Futures”) increased by 7% in April to 33.54 EUR / MWh. The average contract price of the system in the 2nd quarter of 2021 increased to 29.76 EUR / MWh, the closing price of the contract at the end of the month was 29.90 EUR / MWh. The average futures price of the 2022 system increased by 3% in April and was 27.50 EUR / MWh, at the end of the month the contract price was 29.00 EUR / MWh.
The average price of Latvian electricity futures for the April futures contract increased by 5% to 49.19 EUR / MWh, the closing price of the contract was 48.10 EUR / MWh. The price of Latvia’s “futures” in 2022 increased by 2% to 50.28 EUR / MWh in April, at the end of the month the contract price was 51.75 EUR / MWh.
In Latvia, development has exceeded demand
In April of this year, electricity consumption in the Baltics was 4% higher than in the same period a year earlier, and a total of 2,147 GWh was consumed. In Latvia, electricity demand increased by 4% to 576 GWh compared to April 2020.
Higher electricity demand in Latvia was mainly driven by weather conditions. According to the Latvian Environment, Geology and Meteorology Center, the average air temperature in April was + 5.4 ° C, which is 0.3 ° C below the monthly norm. A similar trend was observed in Lithuania, where 931 GWh of electricity was consumed, which is 7% more than in April last year. In Estonia, on the other hand, the amount of electricity consumed this month was 640 GWh, which was at the same level as in April last year.
In April, electricity production in the Baltics decreased by 3% to 1,353 GWh. In April, 651 GWh were generated in Latvia, which is 7% less than a month earlier. In Lithuania, production volumes decreased by 3% to 367 GWh. At the same time, electricity generation in Estonia was 335 GWh, 3% higher than in March.
In April, the total development ratio to electricity consumption in the Baltics increased by 6% compared to March and was 63%. In Latvia, total generation covered 113% of consumption, in Lithuania this indicator was 39%, and in Estonia – 52%.
Development of Daugava hydropower plants increased by 30%
In April, the average inflow into the Daugava was 1237 m3/ s, which was 25% below the multi – annual average inflow level, but was 50% higher than in March. However, compared to the inflow in April 2020, this year it was 1.5 times higher. In Latvia, the total precipitation in April was 10% below the monthly norm. However, compared to the previous year, this year there was a larger accumulation of snow cover, ice in the Daugava, therefore the usual flood of April floods was observed. The inflow of April into the Daugava contributed to the growth of electricity generation in JSC “Latvenergo“Hydroelectric power plants increased by 30% compared to March and produced 503 GWh. Looking back at April last year, this year’s HPP development volumes were 1.5 times higher. At the same time, electricity generation at Latvenergo TEC was 39 GWh, which was 86% less than in March and 27% less than in April of the previous year. The low development of Latvenergo TEC was determined not only by the high development of HPPs, but also by the unavailability of the Riga TEC 2-1 power unit due to maintenance work.
Energy product prices continue to rise
The price of the Brent Crude Futures crude oil futures contract remained at USD 65.33 / bbl in March, but at the end of the month the contract price increased to USD 67.25 / bbl.
In the previous month, oil price volatility was affected by a number of factors. One of them is the agreement of OPEC + member states to gradually increase oil production from May to July, with a monthly increase not exceeding 0.5 bbl / day. At the end of the month, the rise in oil prices was influenced by the positive outlook for economic recovery in the United States and China, as well as higher economic activity and growing demand. At the same time, the situation in the Middle East, the conflict in Yemen and Saudi Arabia, also had an impact on price movements. In addition, the rise in oil prices at the end of the month was also exacerbated by the decline in US crude oil stocks.
Coal futures contract (API2 Coal Futures Front month), the average price increased by 8% to USD 72,18 / tonne in March and continued to rise to USD 77,45 / tonne at the end of the month.
In April, the coal market price was mainly affected by colder weather, lower wind farm development and, consequently, growing demand in both Europe and Asia, which is also reinforced by optimistic forecasts for China’s economic recovery.
In February (“Dutch TTF”), the average price of the April natural gas futures contract increased by 16% to 20.25 EUR / MWh, and the contract ended at a higher price of 22.50 EUR / MWh.
The rise in the prices of European natural gas and other energy products in April was mainly driven by higher demand due to colder weather. The upward trend was also determined by the low filling of European natural gas storage facilities, which was 29.7% at the end of the month, which is significantly lower than in April of the previous year – 62.3%. In addition, the planned annual maintenance works in Norway and lower liquefied natural gas supplies also maintained the price increase.
In April, the European Emissions Trading Scheme (USA Futures) On 21 December, the price increased by 10% to EUR 45,20 / t and at the end of the month, the price of allowances increased to EUR 48,84 / t.
In April, the price of carbon emission allowances followed the upward trend of market prices of other energy products and reached a new record high, this time exceeding the threshold of 48 EUR / MWh. The rise in carbon prices continued to be driven by increased speculator interest and rising commodity prices. At the end of the month, the previous emissions trading phase ended, which also maintained higher demand for emission allowances in April, thus also raising the price.
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